Office of Fair Trading to withdraw merger advice service

Companies will no longer be offered guidance on potential mergers, the new head of the Office of Fair Trading (OFT) has announced as part of a major overhaul aimed at making the office more efficient.

Philip Collins, OFT chairman, said the pressures on the OFT to be more efficient were greater than ever and the guidance would be scrapped as part of a cost-cutting exercise.

He told competition lawyers it was time to remind parties of the OFT’s powers after being exploited in potential mergers.  

“There seems to be a perception that the OFT is a publicly-funded resource that can be effectively used as a tool – some may even say a punchball – in business-to-business, competitor-to-competitor battles,” he said.

He also warned that any companies that fail to provide information to investigators may face the threat of criminal prosecution in a radical reform of the 1998 Competition Act.

As part of the revamp, the OFT will focus more on persuading companies to litigate their own disputes rather than complaining to the OFT. It will also set up a preliminary investigation unit to identify priority cases.

The OFT expects to receive about 1,200 complaint cases in 2006 but only has the resources to pursue between 25 to 40 of them.

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